UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY · 7/22/2020 · B. By Order dated March 3,...

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

BING LI, et al.,

Plaintiffs,

v.

AETERNA ZENTARIS, INC., et al.,

Defendants.

Civil Action No.

3:14-cv-07081-PGS-TJB

STIPULATION AND AGREEMENT OF SETTLEMENT

This Stipulation and Agreement of Settlement, dated as of July 22, 2020

(“Stipulation”), is entered into by and between (a) Gregory Vizirgianakis, Phong

Thomas Dinh, and Jamshid Khodavandi (“Lead Plaintiffs”), on behalf of themselves

and the Class (defined below); and (b) Defendants Aeterna Zentaris, Inc. (“Aeterna”

or the “Company”), Juergen Engel, David Dodd, Paul Blake, and Nicholas

Pelliccione (collectively, the “Individual Defendants,” and together with Aeterna,

“Defendants”) (Lead Plaintiffs and Defendants together are referred to herein as the

“Parties”), and embodies the terms and conditions of the settlement of the above-

Case 3:14-cv-07081-PGS-TJB Document 169-1 Filed 07/23/20 Page 2 of 140 PageID: 4660

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captioned action (the “Action”).1 Subject to the approval of the Court and the terms

and conditions expressly provided herein, this Stipulation is intended to fully,

finally, and forever compromise, settle, release, resolve, and dismiss with prejudice

the Action and all Released Claims (defined below).

WHEREAS:

A. Beginning in November 2014, certain related class actions, captioned

Li v. Aeterna Zentaris, Inc., et al., No. 3:14-cv-07081-PGS-TJB; Silverberg v.

Aeterna Zentaris, Inc., et al., No. 3:14-cv-07164-PGS-DEA; Abdul-Hassan v.

Aeterna Zentaris, Inc., et al., No. 3:14-cv-07225-FLW-DEA; Friedman v. Aeterna

Zentaris, Inc., et al., No. 3:14-cv-07301-FLW-TJB, and Khodavandi v. Aeterna

Zentaris, Inc., et al., No. 3:15-cv-00091-PGS-TJB, were filed in the United States

District Court for the District of New Jersey (the “Court”) alleging violations of the

federal securities laws.

B. By Order dated March 3, 2015, the Court (with the Honorable Peter G.

Sheridan presiding) consolidated these class actions under Case No. 3:14-cv-07081-

PGS-TJB, appointed Lead Plaintiffs, and approved Lead Plaintiffs’ selection of The

Rosen Law Firm as Lead Counsel (“Rosen Law Firm”), Glancy Prongay & Murray

1 All terms with initial capitalization not otherwise defined herein shall have the

meanings ascribed to them in ¶ 1 herein.


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LLP as Co-Lead Counsel (“GPM”),2 and Carella Byrne Cecchi Olstein Brody &

Agnello, P.C. as Liaison Counsel (“Liaison Counsel”). ECF No. 27. Rosen Law

and GPM are collectively referred to herein as “Lead Counsel,” and together with

Liaison Counsel, as “Plaintiffs’ Counsel.”

C. On April 10, 2015, Lead Plaintiffs filed and served their Amended

Class Action Complaint for Violations of the Federal Securities Laws (the “First

Amended Complaint”) asserting claims against: (i) Aeterna, the Individual

Defendants, Dennis Turpin, Richard Sachse, and Jude Dinges, for alleged violations

of Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and

Rule 10b-5 promulgated thereunder; and (ii) the Individual Defendants, Dennis

Turpin, Richard Sachse, and Jude Dinges under Section 20(a) of the Exchange Act.

ECF No. 31. The First Amended Complaint alleged that the defendants made false

or misleading statements concerning the Phase 3 trial results of a diagnostic drug,

AEZS-130, developed by Aeterna. The First Amended Complaint further alleged

that the price of Aeterna common stock was artificially inflated as a result of the

2 At the time of appointment, the firm name of Co-Lead Counsel was Glancy Binkow

& Goldberg LLP, which was subsequently changed to Glancy Prongay & Murray

LLP.


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defendants’ allegedly false and misleading statements and declined when the alleged

truth of those misstatements was publicly revealed.

D. On May 26, 2015, the defendants filed a motion to dismiss the First

Amended Complaint. ECF No. 36. On September 14, 2015, the Court granted the

defendants’ motion to dismiss the First Amended Complaint, finding that Lead

Plaintiffs failed to adequately plead scienter, but allowed Lead Plaintiffs to file

another amended complaint. ECF No. 47.

E. On October 14, 2015, Lead Plaintiffs filed and served their Second

Amended Class Action Complaint for Violations of the Federal Securities Laws (the

“Second Amended Complaint”) asserting claims against Aeterna, the Individual

Defendants, Turpin, Sachse, and Dinges, for alleged violations of Section 10(b) and

20(a) of the Exchange Act. ECF No. 49.

F. On November 11, 2015, the defendants filed a motion to dismiss the

Second Amended Complaint. ECF No. 57. On March 2, 2016, the Court granted in

part and denied in part the defendants’ motion to dismiss the Second Amended

Complaint. ECF No. 66. The Court dismissed all claims asserted against Turpin,

Sachse, and Dinges, as well as all direct Section 10(b) and Rule 10b-5 claims against

Dodd, Blake, and Pelliccione. The Court permitted all other asserted claims to

proceed.


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G. On April 6, 2016, Defendants filed their Answer and Affirmative

Defenses to the Second Amended Complaint. ECF No. 75. Among other things,

Defendants’ Answer denied Lead Plaintiffs’ allegations of wrongdoing and asserted

various defenses to the claims pled against them.

H. Discovery in the Action commenced in August 2016. Since that time,

more than 13,000 documents, totaling over 192,000 pages, have been produced by

the Parties and third parties in response to discovery in the Action. The Parties also

have conducted nearly twenty fact or expert depositions, and the Parties have

exchanged numerous letters and other correspondence concerning disputed

discovery issues.

I. While fact discovery was under way, on December 9, 2016, Lead

Plaintiffs served their motion for class certification, together with the declaration of

Dr. Adam Werner regarding market efficiency. ECF No. 104. In February and

March 2017, Defendants deposed each of the Lead Plaintiffs and Lead Plaintiffs’

market efficiency expert. On March 23, 2017, Defendants served their papers in

opposition to the motion for class certification, together with an expert report of

David I. Tabak, Ph.D., rebutting Dr. Werner’s declaration. ECF No. 105. On April

21, 2017, Lead Plaintiffs deposed Dr. Tabak. On May 8, 2017, Lead Plaintiffs filed


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and served their reply papers in further support of their motion for class certification,

together with an expert rebuttal report of Dr. Adam Werner. ECF No. 106.

J. On May 11, 2017, Defendants requested leave to file a sur-reply to the

motion for class certification (ECF No. 109), which was granted by the Court on

May 22, 2017 (ECF No. 112). On May 31, 2017, Defendants filed and served their

sur-reply. ECF No. 115. On July 20, 2017, the Court heard oral argument on Lead

Plaintiffs’ motion for class certification, and on February 28, 2018, the Court granted

Lead Plaintiffs’ motion for class certification. ECF No. 145.

K. Defendants subsequently petitioned the United States Court of Appeals

for the Third Circuit under Federal Rule of Civil Procedure 23(f) for interlocutory

review of the Court’s order granting class certification, which the Third Circuit

granted. On May 30, 2019, the Third Circuit affirmed the Court’s decision granting

class certification. ECF No. 156.

L. The Parties also discussed the possibility of resolving the Action

through settlement while discovery was ongoing, and prior to the Court granting

Plaintiffs’ motion for class certification. On August 25, 2017, the Parties engaged

in a private mediation with Robert A. Meyer, Esq., of JAMS, serving as the mediator.

In advance of that session, the Parties exchanged and submitted detailed mediation


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statements with numerous exhibits. The session ended without any agreement being

reached.

M. The Parties completed expert discovery in January 2020 and were

proceeding to summary judgment filings set for March 2020. Prior to filing

summary judgment motions, however, the Parties agreed to pursue a second

mediation in an effort to resolve the matter via settlement.

N. On March 4, 2020, the Parties participated in a private mediation with

the Honorable Daniel Weinstein (Ret.) of JAMS serving as mediator. In advance of

that session, the Parties again exchanged and submitted detailed mediation

statements with numerous exhibits. In the days following the mediation, the Parties

reached an agreement in principle to settle the Action pursuant to Judge Weinstein’s

recommendation that was memorialized in a term sheet executed on March 9, 2020

(the “Term Sheet”). The Term Sheet set forth, among other things, the Parties’

agreement to settle and release all claims against Defendants in the Action in

exchange for a cash payment of $6,500,000 for the benefit of the Class, subject to

certain terms and conditions and the execution of a customary “long form”

stipulation and agreement of settlement and related papers.

O. This Stipulation (together with the exhibits hereto) reflects the final and

binding agreement between the Parties and supersedes the Term Sheet.


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P. Based upon their investigation, prosecution, and mediation of the case,

Lead Plaintiffs and Plaintiffs’ Counsel have concluded that the terms and conditions

of this Stipulation are fair, reasonable, and adequate to Lead Plaintiffs and the other

members of the Class, and that the Settlement on these terms and conditions is in the

best interests of the Class. Based on Lead Plaintiffs’ direct oversight of the

prosecution of this matter and with the advice of their counsel, Lead Plaintiffs have

agreed to settle and release the Released Plaintiffs’ Claims pursuant to the terms and

provisions of this Stipulation, after considering, among other things: (i) the

substantial financial benefit that Lead Plaintiffs and the other members of the Class

will receive under the proposed Settlement; and (ii) the significant risks and costs of

continued litigation and trial.

Q. This Stipulation constitutes a compromise of all matters that are in

dispute between the Parties. Defendants deny any wrongdoing and are entering into

this Stipulation solely to eliminate the uncertainty, burden, and expense of further

protracted litigation. This Stipulation shall in no event be construed or deemed to

be evidence of or an admission or concession on the part of any of the Defendants

with respect to any claim or allegation of any fault or liability or wrongdoing or

damage whatsoever, or any infirmity in the defenses that Defendants have, or could

have, asserted. Defendants deny that Lead Plaintiffs have asserted any valid claims


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as to any of them, and further deny any and all allegations of fault, liability,

wrongdoing, or damages whatsoever. Similarly, this Stipulation shall in no event be

construed or deemed to be evidence of or an admission or concession on the part of

Lead Plaintiffs of any infirmity in any of the claims asserted in the Action, or an

admission or concession that any of the Defendants’ defenses to liability had any

merit.

R. Each of the Parties recognizes and acknowledges, however, that the

Action has been initiated, filed, and prosecuted by Lead Plaintiffs in good faith and

defended by Defendants in good faith, that the Action is being voluntarily settled

with the advice of counsel, and that the terms of the Settlement are fair, adequate,

and reasonable.

NOW THEREFORE, it is hereby STIPULATED AND AGREED, by and

among the Parties, through their respective undersigned counsel and subject to the

approval of the Court pursuant to Rule 23(e) of the Federal Rules of Civil Procedure,

that, in consideration of the benefits flowing to the Parties from the Settlement, all

Released Plaintiffs’ Claims as against the Defendants’ Releasees and all Released

Defendants’ Claims as against the Plaintiffs’ Releasees shall be settled and released,

upon and subject to the terms and conditions set forth below.


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DEFINITIONS

1. As used in this Stipulation and any exhibits attached hereto and made a

part hereof, the following capitalized terms shall have the following meanings:

(a) “Alternate Judgment” means a form of final judgment that may

be entered by the Court herein, but in a form other than the form of Judgment

provided for in this Stipulation.

(b) “Authorized Claimant” means a Class Member who or which

submits a Claim to the Claims Administrator that is approved by the Court for

payment from the Net Settlement Fund.

(c) “Claim” means a paper claim submitted on a Proof of Claim Form

or an electronic claim that is submitted to the Claims Administrator.

(d) “Claim Form” or “Proof of Claim and Release” means the form,

substantially in the form attached hereto as Exhibit 2 to Exhibit A, that a Claimant

must complete and submit should that Claimant seek to share in a distribution of the

Net Settlement Fund.

(e) “Claimant” means a person or entity who or which submits a

Claim to the Claims Administrator seeking to be eligible to share in the proceeds of

the Net Settlement Fund.


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(f) “Claims Administrator” means Strategic Claims Services

(“SCS”), the firm retained by Lead Counsel, subject to approval of the Court, to

provide all notices approved by the Court to potential Class Members and to

administer the Settlement.

(g) “Class” means all Persons who purchased Aeterna securities on a

U.S. Exchange or in a U.S. transaction during the period from August 30, 2011

through November 6, 2014, both dates inclusive, and who did not sell such securities

prior to November 6, 2014. Excluded from the Class are: (i) Defendants and Former

Defendants; (ii) any current or former Officers or directors of Aeterna; (iii) the

Immediate Family Members of any Defendant or Former Defendants, or any current

or former Officer or director of Aeterna; and (iv) any entity that any Defendants or

Former Defendants owns or controls, or owned or controlled during the Class Period.

Also excluded from the Class are any persons and entities who or which exclude

themselves by submitting a request for exclusion that is accepted by the Court.

(h) “Class Distribution Order” means an order entered by the Court

authorizing and directing that the Net Settlement Fund be distributed, in whole or in

part, to Authorized Claimants.

(i) “Class Members” means each Person who is a member of the

Class.


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(j) “Class Period” means the period from August 30, 2011 through

November 6, 2014, both dates inclusive.

(k) “Complaint” means the Second Amended Complaint.

(l) “Defendants’ Counsel” means Norton Rose Fulbright US LLP,

counsel for Defendant Aeterna (“Aeterna’s Counsel”), and King & Spalding LLP,

counsel for the Individual Defendants (“Individual Defendants’ Counsel”).

(m) “Defendants’ Releasees” means Defendants, Former Defendants,

Defendants’ Counsel, and their current and former parents, affiliates, subsidiaries,

officers, directors, agents, successors, predecessors, assigns, assignees, partnerships,

partners, trustees, trusts, employees, Immediate Family Members, insurers,

reinsurers, and attorneys.

(n) “Effective Date” with respect to the Settlement means the first

date by which all of the events and conditions specified in ¶ 32 of this Stipulation

have been met and have occurred or have been waived.

(o) “Escrow Account” means an account maintained at The

Huntington National Bank wherein the Settlement Amount shall be deposited and

held in escrow under the control of the Escrow Agent.

(p) “Escrow Agent” means The Huntington National Bank.


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(q) “Escrow Agreement” means the agreement between Lead

Counsel and the Escrow Agent setting forth the terms under which the Escrow Agent

shall maintain the Escrow Account.

(r) “Excluded Defendants’ Claims” means (i) any claims relating to

the enforcement of the Settlement; and (ii) any claims against any person or entity

who or which submits a request for exclusion that is accepted by the Court.

(s) “Excluded Plaintiffs’ Claims” means (i) any claims relating to the

enforcement of the Settlement; and (ii) any claims of any person or entity who or

which submits a request for exclusion that is accepted by the Court.

(t) “Final,” with respect to the Judgment or, if applicable, the

Alternate Judgment, means: (i) if no appeal from the Judgment or Alternative

Judgment is filed, the expiration date of the time provided for filing or noticing any

such appeal under the Federal Rules of Appellate Procedure; or (ii) if an appeal from

the Judgment or Alternative Judgment is timely filed, (a) the date of final dismissal

of all such appeals, or the final dismissal of any proceeding on certiorari or otherwise

for such appeals, or (b) the date the Judgment or Alternative Judgment is finally

affirmed on appeal, including the expiration of the time to file a petition for a writ

of certiorari or other form of review, or the denial of a writ of certiorari or other form

of review, and, if certiorari or other form of review is granted, the date of final


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affirmance following review pursuant to that grant. However, any appeal or

proceeding seeking subsequent judicial review of the Judgment or Alternative

Judgment pertaining solely to an order issued with respect to (i) attorneys’ fees,

costs, or expenses, or (ii) the plan of allocation of Settlement proceeds (as submitted

or subsequently modified), shall not in any way delay or preclude a judgment from

becoming Final.

(u) “Former Defendants” means Dennis Turpin, Jude Dinges, and

Richard Sachse.

(v) “Immediate Family Members” means children, stepchildren,

parents, stepparents, spouses, siblings, mothers-in-law, fathers-in-law, sons-in-law,

daughters-in-law, brothers-in-law, and sisters-in-law. As used in this paragraph,

“spouse” shall mean a husband, a wife, or a partner in a state-recognized domestic

relationship or civil union.

(w) “Judgment” means the final judgment, substantially in the form

attached hereto as Exhibit B, to be entered by the Court approving the Settlement.

(x) “Litigation Expenses” means costs and expenses incurred in

connection with commencing, prosecuting, and settling the Action (which may

include the costs and expenses of Lead Plaintiffs directly related to their


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representation of the Class), for which Lead Counsel intends to apply to the Court

for payment from the Settlement Fund.

(y) “Net Settlement Fund” means the Settlement Fund less: (i) any

Taxes; (ii) any Notice and Administration Costs; (iii) any Litigation Expenses

awarded by the Court; (iv) any attorneys’ fees awarded by the Court; and (v) any

other costs or fees approved by the Court.

(z) “Notice” means the Notice of (I) Pendency of Class Action and

Proposed Settlement; (II) Settlement Fairness Hearing; and (III) Motion for an

Award of Attorneys’ Fees and Litigation Expenses, substantially in the form

attached hereto as Exhibit 1 to Exhibit A, which is to be mailed to Class Members

following approval by the Court.

(aa) “Notice and Administration Costs” means the costs, fees, and

expenses that are incurred by the Claims Administrator and/or Lead Counsel in

connection with: (i) providing notices to the Class; and (ii) administering the

Settlement, including but not limited to the Claims process, as well as the costs, fees,

and expenses incurred in connection with the Escrow Account.

(bb) “Officer” means any officer as that term is defined in Rule 16a-

1(f) of the Exchange Act.


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(cc) “Person” means an individual, corporation, limited liability

corporation, professional corporation, partnership, limited partnership, limited

liability partnership, limited liability company, association, joint stock company,

estate, legal representative, trust, unincorporated association, government or any

political subdivision or agency thereof, and any business or legal entity and all of

their respective spouses, heirs, beneficiaries, executors, administrators,

predecessors, successors, representatives, or assignees.

(dd) “Plaintiffs’ Releasees” means Lead Plaintiffs, Plaintiffs’

Counsel, all other plaintiffs in the Action, their respective attorneys, all other Class

Members, and their respective current and former parents, affiliates, subsidiaries,

officers, directors, agents, successors, predecessors, assigns, assignees, partnerships,

partners, trustees, trusts, employees, Immediate Family Members, insurers,

reinsurers, and attorneys.

(ee) “Plan of Allocation” means the proposed plan of allocation of the

Net Settlement Fund set forth in the Notice.

(ff) “Preliminary Approval Order” means the order, substantially in

the form attached hereto as Exhibit A, to be entered by the Court preliminarily

approving the Settlement and directing that notice of the Settlement be provided to

the Class.


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(gg) “PSLRA” means the Private Securities Litigation Reform Act of

1995, 15 U.S.C. § 78u-4, as amended.

(hh) “Released Claims” means all Released Defendants’ Claims and

all Released Plaintiffs’ Claims.

(ii) “Released Defendants’ Claims” means all claims (including

Unknown Claims), debts, disputes, demands, rights, actions or causes of action,

liabilities, damages, losses, obligations, sums of money due, judgments, suits,

amounts, matters, issues and charges of any kind whatsoever (including, but not

limited to, any claims for interest, attorneys’ fees, expert or consulting fees, and any

other costs, expenses, amounts, or liabilities whatsoever), whether fixed or

contingent, accrued or unaccrued, liquidated or unliquidated, at law or in equity,

matured or unmatured, foreseen or unforeseen, whether arising under federal or state

statutory or common law or any other law, rule, or regulation, whether foreign or

domestic, that arise out of or relate in any way to the institution, prosecution, or

settlement of the claims asserted in the Action. Provided, however, that the Released

Defendants’ Claims do not include: (i) claims or rights related to indemnification or

insurance related to claims asserted in the Action; (ii) any claims relating to the

enforcement of the Settlement; or (iii) any claims against any person or entity who

or which submits a request for exclusion from the Class that is accepted by the Court.


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(jj) “Released Plaintiffs’ Claims” means all claims (including

Unknown Claims), debts, disputes, demands, rights, actions or causes of action,

liabilities, damages, losses, obligations, sums of money due, judgments, suits,

amounts, matters, issues and charges of any kind whatsoever (including, but not

limited to, any claims for interest, attorneys’ fees, expert or consulting fees, and any

other costs, expenses, amounts, or liabilities whatsoever), whether fixed or

contingent, accrued or unaccrued, liquidated or unliquidated, at law or in equity,

matured or unmatured, foreseen or unforeseen, whether individual or class in nature,

whether arising under federal or state statutory or common law or any other law,

rule, or regulation, whether foreign or domestic, that Lead Plaintiffs or any other

member of the Class: (i) (A) asserted in any of the complaints filed in the Action; or

(B) could have asserted in the Action or in any other action or in any other forum

that arise out of, are based upon, in any way related to, or are in consequence of any

of the facts, allegations, transactions, matters, events, disclosures, non-disclosures,

occurrences, representations, statements, acts, omissions, or failures to act that were

involved, set forth, or referred to in any of the complaints filed in the Action, or that

otherwise would have been barred by res judicata had the Action been fully litigated

to a final judgment; and (ii) relate to the purchase or sale of Aeterna securities on a

U.S. Exchange or in a U.S. transaction during the Class Period. Provided, however,


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that Released Plaintiffs’ Claims do not include (i) any claims relating to the

enforcement of the Settlement, or (ii) any claims of any person or entity who or

which submits a request for exclusion that is accepted by the Court.

(kk) “Releasee(s)” means each and any of the Defendants’ Releasees

and each and any of the Plaintiffs’ Releasees.

(ll) “Releases” means the releases set forth in ¶¶ 4-5 of this

Stipulation.

(mm) “Settlement” means the settlement between Lead Plaintiffs and

Defendants on the terms and conditions set forth in this Stipulation.

(nn) “Settlement Amount” means $6,500,000 in cash.

(oo) “Settlement Fund” means the Settlement Amount plus any and

all interest earned thereon following deposit into the Escrow Account.

(pp) “Settlement Fairness Hearing” means the hearing set by the Court

under Rule 23(e)(2) of the Federal Rules of Civil Procedure to consider final

approval of the Settlement.

(qq) “Summary Notice” means the Summary Notice of (I) Pendency

of Class Action and Proposed Settlement; (II) Settlement Fairness Hearing; and

(III) Motion for an Award of Attorneys’ Fees and Litigation Expenses, substantially


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in the form attached hereto as Exhibit 3 to Exhibit A, to be published as set forth in

the Preliminary Approval Order.

(rr) “Taxes” means: (i) all federal, state, and/or local taxes of any kind

(including any interest or penalties thereon) on any income earned by the Settlement

Fund; (ii) the expenses and costs incurred by Lead Counsel in connection with

determining the amount of, and paying, any taxes owed by the Settlement Fund

(including, without limitation, expenses of tax attorneys and accountants); and (iii)

all taxes imposed on payments by the Settlement Fund, including withholding taxes.

(ss) “Unknown Claims” means any Released Plaintiffs’ Claims which

Lead Plaintiffs or any other Class Member does not know or suspect to exist in his,

her, or its favor at the time of the release of such claims, and any Released

Defendants’ Claims which any Defendant or Former Defendant does not know or

suspect to exist in his, her, or its favor at the time of the release of such claims,

which, if known by him, her, or it, might have affected his, her, or its decision(s)

with respect to this Settlement. With respect to any and all Released Claims, the

Parties stipulate and agree that, upon the Effective Date of the Settlement, Lead

Plaintiffs and Defendants shall expressly waive, and each of the other Class

Members and each of the Former Defendants shall be deemed to have waived, and

by operation of the Judgment or the Alternate Judgment, if applicable, shall have


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expressly waived, any and all provisions, rights, and benefits conferred by any law

of any state or territory of the United States, or principle of common law or foreign

law, which is similar, comparable, or equivalent to California Civil Code §1542,

which provides:

A general release does not extend to claims that the creditor or releasing

party does not know or suspect to exist in his or her favor at the time of

executing the release and that, if known by him or her, would have

materially affected his or her settlement with the debtor or released

party.

Lead Plaintiffs and Defendants acknowledge, and each of the other Class Members

and each of the Former Defendants shall be deemed by operation of law to have

acknowledged, that the foregoing waiver was separately bargained for and a key

element of the Settlement.

PRELIMINARY APPROVAL OF SETTLEMENT

2. Upon execution of this Stipulation, Lead Plaintiffs will promptly move

for preliminary approval of the Settlement, authorization to provide notice of the

Settlement to the Class, and the scheduling of a hearing for consideration of final

approval of the Settlement, which motion shall be unopposed by Defendants.

Concurrently with the motion for preliminary approval, Lead Plaintiffs shall apply

to the Court for, and Defendants shall agree to, entry of the Preliminary Approval

Order, substantially in the form attached hereto as Exhibit A.


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RELEASE OF CLAIMS

3. The obligations incurred pursuant to this Stipulation are in

consideration of: (a) the full and final disposition of the Action as against

Defendants; and (b) the Releases provided for herein.

4. Pursuant to the Judgment, or the Alternate Judgment, if applicable,

without further action by anyone, upon the Effective Date of the Settlement, Lead

Plaintiffs and each of the other Class Members, on behalf of themselves, and their

respective heirs, executors, administrators, predecessors, successors, and assigns in

their capacities as such, and any other person or entity purporting to claim through

or on behalf of them directly or indirectly in such capacity, shall be deemed to have,

and by operation of law and of the judgment shall have, fully, finally, and forever

compromised, settled, released, resolved, relinquished, waived, and discharged any

or all of the Released Plaintiffs’ Claims against the Defendants’ Releasees, and shall

forever be barred and enjoined from commencing, instituting, prosecuting, or

otherwise pursuing in any court of law or equity, arbitration tribunal, or

administrative forum, whether directly or in any other capacity, any or all of the

Released Plaintiffs’ Claims against any of the Defendants’ Releasees. This Release

shall not apply to any of the Excluded Plaintiffs’ Claims.


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5. Pursuant to the Judgment, or the Alternate Judgment, if applicable,

without further action by anyone, upon the Effective Date of the Settlement,

Defendants and Former Defendants, on behalf of themselves, and their respective

heirs, executors, administrators, predecessors, successors, and assigns in their

capacities as such, and any other person or entity purporting to claim through or on

behalf of them directly or indirectly in such capacity, shall be deemed to have, and

by operation of law and of the judgment shall have, fully, finally, and forever

compromised, settled, released, resolved, relinquished, waived, and discharged any

or all of the Released Defendants’ Claims against Lead Plaintiffs and the other

Plaintiffs’ Releasees, and shall forever be barred and enjoined from commencing,

instituting, prosecuting, or otherwise pursuing in any court of law or equity,

arbitration tribunal, or administrative forum, whether directly or in any other

capacity, any or all of the Released Defendants’ Claims against any of the Plaintiffs’

Releasees. This Release shall not apply to any of the Excluded Defendants’ Claims.

6. Notwithstanding ¶¶ 4-5 above, nothing in the Judgment, or the

Alternate Judgment, if applicable, shall bar any action by any of the Parties to

enforce or effectuate the terms of this Stipulation or the Judgment, or Alternate

Judgment, if applicable.


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THE SETTLEMENT CONSIDERATION

7. In consideration of the Settlement and the Released Plaintiffs’ Claims,

Aeterna shall cause to be paid the Settlement Amount into the Escrow Account no

later than fifteen (15) business days after the later of: (a) the date of entry by the

Court of an order preliminarily approving the Settlement; or (b) Aeterna’s Counsel’s

receipt from Lead Counsel of the information necessary to effectuate a transfer of

funds to the Escrow Account, including wiring instructions that include the bank

name and ABA routing number, account name and number, and a signed Internal

Revenue Service Form W-9 reflecting a valid taxpayer identification number for the

qualified settlement fund in which the Settlement Amount is to be deposited. The

Settlement Amount represents the entirety of Defendants’ financial obligations

under this Stipulation and in connection with this Settlement, meaning (among other

things) that it includes all attorneys’ fees and expenses for Plaintiffs’ Counsel,

Notice and Administration Costs, Taxes, and costs of any kind whatsoever

associated with the Settlement. The full payment of the entire Settlement Amount

into the Escrow Account in accordance with this paragraph fully discharges

Defendants’ financial obligations under this Stipulation and in connection with the

Settlement. Former Defendants have no responsibility as to any of the financial

obligations under this Stipulation and in connection with this Settlement.


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USE OF SETTLEMENT FUND

8. The Settlement Fund shall be used to pay: (a) any Taxes; (b) any Notice

and Administration Costs; (c) any Litigation Expenses awarded by the Court; (d) any

attorneys’ fees awarded by the Court; and (e) any other costs and fees approved by

the Court. The balance remaining in the Settlement Fund, that is, the Net Settlement

Fund, shall be distributed to Authorized Claimants as provided in ¶¶ 18-30 below.

9. Except as provided herein or pursuant to order of the Court, the Net

Settlement Fund shall remain in the Escrow Account prior to the Effective Date. All

funds held by the Escrow Agent shall be deemed to be in the custody of the Court

and shall remain subject to the jurisdiction of the Court until such time as the funds

shall be distributed or returned pursuant to the terms of this Stipulation and/or further

order of the Court. The Escrow Agent shall invest any funds in the Escrow Account

exclusively in instruments or accounts backed by the full faith and credit of the

United States Government or fully insured by the United States Government or an

agency thereof, including a U.S. Treasury Fund or a bank account that is either: (a)

fully insured by the Federal Deposit Insurance Corporation; or (b) secured by

instruments backed by the full faith and credit of the United States Government. All

risks related to the investment of the Settlement Fund in accordance with the

investment guidelines set forth in this paragraph shall be borne by the Settlement


26

Fund, and Defendants’ Releasees and their counsel shall have no responsibility for,

interest in, or liability whatsoever with respect to investment decisions or the actions

of the Escrow Agent, or any transactions executed by the Escrow Agent.

10. The Parties agree that the Settlement Fund is intended to be a Qualified

Settlement Fund within the meaning of Treasury Regulation § 1.468B-1 and that

Lead Counsel, as administrator of the Settlement Fund within the meaning of

Treasury Regulation § 1.468B-2(k)(3), shall be solely responsible for filing or

causing to be filed all informational and other tax returns as may be necessary or

appropriate (including, without limitation, the returns described in Treasury

Regulation § 1.468B-2(k)) for the Settlement Fund. Lead Counsel, or its designated

agent, shall also be responsible for causing payment to be made from the Settlement

Fund of any Taxes owed with respect to the Settlement Fund. Defendants’ Releasees

shall not have any liability or responsibility for any such Taxes. Upon written

request, Defendants will provide to Lead Counsel the statement described in

Treasury Regulation § 1.468B-3(e). Lead Counsel, as administrator of the

Settlement Fund within the meaning of Treasury Regulation § 1.468B-2(k)(3), shall

timely make such elections as are necessary or advisable to carry out this paragraph,

including, as necessary, making a “relation back election,” as described in Treasury

Regulation § 1.468B-1(j), to cause the Qualified Settlement Fund to come into


27

existence at the earliest allowable date, and shall take or cause to be taken all actions

as may be necessary or appropriate in connection therewith.

11. All Taxes shall be paid out of the Settlement Fund, and shall be timely

paid, or caused to be paid, by the Escrow Agent pursuant to the disbursement

instructions to be set forth in the Escrow Agreement, and without further order of

the Court. Any tax returns prepared for the Settlement Fund (as well as the election

set forth therein) shall be consistent with the previous paragraph and in all events

shall reflect that all Taxes on the income earned by the Settlement Fund shall be paid

out of the Settlement Fund as provided herein. Defendants’ Releasees shall have no

responsibility or liability for the acts or omissions of Lead Counsel or its agents with

respect to the payment of Taxes, as described herein. The Settlement Fund shall

indemnify and hold each of Defendants’ Releasees and their counsel harmless for

any Taxes (including, without limitation, Taxes payable by reason of any such

indemnification).

12. The Settlement is not a claims-made, reversionary settlement. Upon

the occurrence of the Effective Date, no Defendant or Defendants’ Releasee, or any

other person or entity who or which paid any portion of the Settlement Amount,

including, without limitation, Defendants’ insurance carriers, shall have any right to

the return of the Settlement Fund or any portion thereof for any reason whatsoever,


28

including without limitation, the number of Claims submitted, the collective amount

of Recognized Claims of Authorized Claimants, the percentage of recovery of

losses, or the amounts to be paid to Authorized Claimants from the Net Settlement

Fund.

13. Notwithstanding the fact that the Effective Date of the Settlement has

not yet occurred, Lead Counsel may pay up to $300,000 from the Settlement Fund,

without further approval from Defendants or order of the Court, for Notice and

Administration Costs actually incurred and paid or payable. Prior to the Effective

Date, Notice and Administration Costs in excess of $300,000 shall be paid from the

Settlement Fund subject to prior approval from the Court. Such costs and expenses

shall include, without limitation, the actual costs of printing and mailing the Notice,

publishing the Summary Notice, reimbursements to nominee owners for forwarding

the Notice to their beneficial owners, the administrative expenses incurred and fees

charged by the Claims Administrator in connection with providing notice and

administering the Settlement (including processing the submitted Claims), and the

fees, if any, of the Escrow Agent. Lead Plaintiffs, Plaintiffs’ Counsel, Defendants,

and Defendants’ Counsel shall not bear any liability for Notice and Administration

Costs.


29

14. In the event that this Stipulation is not approved or the Settlement is not

approved, or is terminated, canceled, or the Effective Date otherwise fails to occur

for any reason, including, without limitation, in the event the Judgment or

Alternative Judgment, if applicable, is reversed or vacated or materially altered

following any appeal taken therefrom, or is successfully collaterally attacked, the

Settlement Fund less Notice and Administration Costs or Taxes paid, incurred, or

due and owing pursuant to ¶¶ 11 and 13 hereof in connection with the Settlement

provided for herein, shall be refunded pursuant to written instructions from

Defendants’ Counsel in accordance with ¶ 34 herein.

ATTORNEYS’ FEES AND LITIGATION EXPENSES

15. Lead Counsel will apply to the Court for a collective award of

attorneys’ fees to Plaintiffs’ Counsel to be paid solely from (and out of) the

Settlement Fund. Lead Counsel also will apply to the Court for payment of

Litigation Expenses, which may include a request for reimbursement of Lead

Plaintiffs’ costs and expenses directly related to its representation of the Class, to be

paid solely from (and out of) the Settlement Fund. Lead Counsel’s application for

an award of attorneys’ fees and/or Litigation Expenses is not the subject of any

agreement between Defendants and Lead Plaintiffs other than what is set forth in

this Stipulation.


30

16. Any attorneys’ fees and Litigation Expenses that are awarded by the

Court shall be paid to Lead Counsel immediately upon award, notwithstanding the

existence of any timely filed objections thereto, or potential for appeal therefrom, or

collateral attack on the Settlement or any part thereof, subject to Plaintiffs’ Counsel’s

obligation to make appropriate refunds or repayments to the Settlement Fund, plus

accrued interest at the same net rate as is earned by the Settlement Fund, if the

Settlement is terminated pursuant to the terms of this Stipulation or if, as a result of

any appeal or further proceedings on remand, or successful collateral attack, the

award of attorneys’ fees and/or Litigation Expenses is reduced or reversed and such

order reducing or reversing the award has become Final. Plaintiffs’ Counsel shall

make the appropriate refund or repayment in full no later than thirty (30) days after:

(a) receiving from Defendants’ Counsel notice of the termination of the Settlement;

or (b) any order reducing or reversing the award of attorneys’ fees and/or Litigation

Expenses has become Final. An award of attorneys’ fees and/or Litigation Expenses

is not a necessary term of this Stipulation and is not a condition of the Settlement

embodied herein. Neither Lead Plaintiffs nor Lead Counsel may cancel or terminate

the Settlement based on this Court’s or any appellate court’s ruling with respect to

attorneys’ fees and/or Litigation Expenses.


31

17. Lead Counsel shall allocate the attorneys’ fees awarded amongst

Plaintiffs’ Counsel in a manner which it, in good faith, believes reflects the

contributions of such counsel to the institution, prosecution, and settlement of the

Action. Defendants’ Releasees shall have no responsibility for or liability

whatsoever with respect to the allocation or award of attorneys’ fees or Litigation

Expenses. The attorneys’ fees and Litigation Expenses that are awarded to

Plaintiffs’ Counsel shall be payable solely from the Escrow Account.

NOTICE AND SETTLEMENT ADMINISTRATION

18. As part of the Preliminary Approval Order, Lead Counsel shall seek

appointment of a Claims Administrator. The Claims Administrator shall administer

the Settlement, including but not limited to the process of receiving, reviewing, and

approving or denying Claims, under Lead Counsel’s supervision and subject to the

jurisdiction of the Court. Other than Aeterna’s obligation to provide its security lists

as provided in ¶ 19 below, none of the Defendants, nor any of the other Defendants’

Releasees, shall have any involvement in or any responsibility, authority, or liability

whatsoever for the selection of the Claims Administrator, the Plan of Allocation, the

administration of the Settlement, the Claims process, or disbursement of the Net

Settlement Fund, and shall have no liability whatsoever to any person or entity,

including, but not limited to, Lead Plaintiffs, any other Class Members, or Lead


32

Counsel in connection with the foregoing. Defendants and Defendants’ Counsel

shall cooperate in the administration of the Settlement to the extent reasonably

necessary to effectuate its terms.

19. In accordance with the terms of the Preliminary Approval Order to be

entered by the Court, Lead Counsel shall cause the Claims Administrator to mail or

email the Notice and Proof of Claim and Release to those members of the Class as

may be identified through reasonable effort. Lead Counsel shall also cause the

Claims Administrator to have the Summary Notice published in accordance with the

terms of the Preliminary Approval Order to be entered by the Court. For purposes

of identifying and providing notice to the Class, within ten (10) business days of the

date of entry of the Preliminary Approval Order, Aeterna shall provide or cause to

be provided to the Claims Administrator in electronic format (at no cost to the

Settlement Fund, Lead Counsel, or the Claims Administrator) its security lists

(consisting of names, addresses, and, if readily available, email addresses) of the

purchasers of Aeterna securities during the Class Period.

20. No later than ten (10) calendar days following the filing of this

Stipulation with the Court, Defendants shall serve the notice specified under the

Class Action Fairness Act, 28 U.S.C. § 1715, et seq. (“CAFA”). Defendants are

solely responsible for the costs of the CAFA notice and administering the CAFA


33

notice. At least seven (7) calendar days before the Settlement Fairness Hearing,

Defendants shall cause to be served on Lead Counsel and filed with the Court proof,

by affidavit or declaration, regarding compliance with the notice requirements of

CAFA. The Parties agree that any delay by Defendants in timely serving the CAFA

notice will not provide grounds for delay of the Settlement Fairness Hearing or entry

of the Judgment.

21. The Claims Administrator shall receive Claims and determine first,

whether the Claim is a valid Claim, in whole or part, and second, each Authorized

Claimant’s pro rata share of the Net Settlement Fund based upon each Authorized

Claimant’s Recognized Claim compared to the total Recognized Claims of all

Authorized Claimants (as set forth in the Plan of Allocation set forth in the Notice

attached hereto as Exhibit 1 to Exhibit A, or in such other plan of allocation as the

Court approves).

22. The Plan of Allocation proposed in the Notice is not a necessary term

of the Settlement or of this Stipulation and it is not a condition of the Settlement or

of this Stipulation that any particular plan of allocation be approved by the Court.

Lead Plaintiffs and Lead Counsel may not cancel or terminate the Settlement (or this

Stipulation) based on this Court’s or any appellate court’s ruling with respect to the

Plan of Allocation or any other plan of allocation in this Action. Defendants and the


34

other Defendants’ Releasees shall not object in any way to the Plan of Allocation or

any other plan of allocation in this Action. No Defendant, or any of the other

Defendants’ Releasees, shall have any involvement with or liability, obligation, or

responsibility whatsoever for the application of the Court-approved plan of

allocation.

23. Any Class Member who or which does not submit a valid Claim will

not be entitled to receive any distribution from the Net Settlement Fund, but will

otherwise be bound by all of the terms of this Stipulation and the Settlement,

including the terms of the Judgment or the Alternate Judgment, if applicable, to be

entered in the Action and the Releases provided for herein and therein, and will be

permanently barred and enjoined from bringing any action, claim, or other

proceeding of any kind against the Defendants’ Releasees with respect to the

Released Plaintiffs’ Claims in the event that the Effective Date occurs.

24. Lead Counsel shall be responsible for supervising the administration of

the Settlement and the disbursement of the Net Settlement Fund subject to Court

approval. No Defendant, or any other Defendants’ Releasee, shall be permitted to

review, contest, or object to any Claim, or any decision of the Claims Administrator

or Lead Counsel with respect to accepting or rejecting any Claim for payment. Lead

Counsel shall have the right, but not the obligation, to waive what it deems to be


35

formal or technical defects in any Claims submitted in the interests of achieving

substantial justice.

25. For purposes of determining the extent, if any, to which a Class

Member shall be entitled to be treated as an Authorized Claimant, the following

conditions shall apply:

(a) Each Claimant shall be required to submit a Claim in paper form,

substantially in the form attached hereto as Exhibit 2 to Exhibit A, or in electronic

form, in accordance with the instructions for the submission of such Claims, and

supported by such documents as are designated therein, including proof of the

Claimant’s loss, or such other documents or proof as the Claims Administrator or

Lead Counsel, in their discretion, may deem acceptable;

(b) All Claims must be submitted by the date set by the Court in the

Preliminary Approval Order and specified in the Notice. Any Class Member who

fails to submit a Claim by such date shall be forever barred from receiving any

distribution from the Net Settlement Fund or payment pursuant to this Stipulation

(unless by Order of the Court such Class Member’s Claim is accepted), but shall in

all other respects be bound by the terms of this Stipulation and the Settlement,

including the terms of the Judgment or Alternate Judgment, if applicable, and the

Releases provided for herein and therein, and will be permanently barred and


36

enjoined from bringing any action, claim, or other proceeding of any kind against

any Defendants’ Releasees with respect to any Released Plaintiffs’ Claim. Provided

that it is mailed by the claim-submission deadline, a Claim Form shall be deemed to

be submitted when postmarked, if received with a postmark indicated on the

envelope and if mailed by first-class mail and addressed in accordance with the

instructions thereon. In all other cases, the Claim Form shall be deemed to have

been submitted on the date when actually received by the Claims Administrator;

(c) Each Claim shall be submitted to and reviewed by the Claims

Administrator who shall determine in accordance with this Stipulation and the plan

of allocation the extent, if any, to which each Claim shall be allowed, subject to

review by the Court pursuant to subparagraph (e) below as necessary;

(d) Claims that do not meet the submission requirements may be

rejected. Prior to rejecting a Claim in whole or in part, the Claims Administrator

shall communicate with the Claimant in writing, to give the Claimant the chance to

remedy any curable deficiencies in the Claim submitted. The Claims Administrator

shall notify, in a timely fashion and in writing, all Claimants whose Claim the Claims

Administrator proposes to reject in whole or in part, setting forth the reasons

therefor, and shall indicate in such notice that the Claimant whose Claim is to be


37

rejected has the right to a review by the Court if the Claimant so desires and complies

with the requirements of subparagraph (e) below; and

(e) If any Claimant whose Claim has been rejected in whole or in part

desires to contest such rejection, the Claimant must, within fourteen (14) days after

the date of mailing of the notice required in subparagraph (d) above or a lesser time

period if the Claim was untimely, serve upon the Claims Administrator a notice and

statement of reasons indicating the Claimant’s grounds for contesting the rejection

along with any supporting documentation, and requesting a review thereof by the

Court. If a dispute concerning a Claim cannot be otherwise resolved, Lead Counsel

shall thereafter present the request for review to the Court.

26. Each Claimant shall be deemed to have submitted to the jurisdiction of

the Court with respect to the Claimant’s Claim, and the Claim will be subject to

investigation and discovery under the Federal Rules of Civil Procedure, provided,

however, that such investigation and discovery shall be limited to that Claimant’s

status as a Class Member and the validity and amount of the Claimant’s Claim. No

discovery shall be allowed on the merits of this Action or of the Settlement in

connection with the processing of Claims.

27. Lead Counsel will apply to the Court, on notice to Defendants’ Counsel,

for a Class Distribution Order: (a) approving the Claims Administrator’s


38

determinations concerning the acceptance and rejection of the Claims submitted;

(b) approving payment of any administration fees and expenses associated with the

administration of the Settlement from the Escrow Account; and (c) if the Effective

Date has occurred, directing payment of the Net Settlement Fund to Authorized

Claimants from the Escrow Account.

28. Payment pursuant to the Class Distribution Order shall be final and

conclusive against all Class Members. All Class Members whose Claims are not

approved by the Court for payment shall be barred from participating in distributions

from the Net Settlement Fund, but otherwise shall be bound by the terms of this

Stipulation and the Settlement, including the terms of the Judgment or Alternate

Judgment, if applicable, and the Releases provided for herein and therein, and will

be permanently barred and enjoined from bringing any action against any and all

Defendants’ Releasees with respect to any and all of the Released Plaintiffs’ Claims.

29. No person or entity shall have any claim against Lead Plaintiffs, Lead

Counsel, the Claims Administrator, or any other agent designated by Lead Counsel,

or Defendants’ Releasees and/or their respective counsel, arising from distributions

made substantially in accordance with the Stipulation, the plan of allocation

approved by the Court, or any order of the Court. Lead Plaintiffs and Defendants,

and their respective counsel, and all other Releasees shall have no liability


39

whatsoever for the investment or distribution of the Settlement Fund or the Net

Settlement Fund, the plan of allocation, or the determination, administration,

calculation, or payment of any claim or nonperformance of the Claims

Administrator, the payment or withholding of taxes (including interest and penalties)

owed by the Settlement Fund, or any losses incurred in connection therewith.

30. All proceedings with respect to the administration, processing, and

determination of Claims and the determination of all controversies relating thereto,

including disputed questions of law and fact with respect to the validity of Claims,

shall be subject to the jurisdiction of the Court. All Class Members and Parties to

this Settlement expressly waive trial by jury (to the extent any such right may exist)

and any right of appeal or review with respect to such determinations.

TERMS OF THE JUDGMENT

31. If the Settlement contemplated by this Stipulation is approved by the

Court, Lead Counsel and Defendants’ Counsel shall request that the Court enter a

Judgment, substantially in the form attached hereto as Exhibit B.

CONDITIONS OF SETTLEMENT AND EFFECT OF

DISAPPROVAL, CANCELLATION, OR TERMINATION

32. The Effective Date of the Settlement shall be deemed to occur on the

occurrence or waiver of all of the following events:


40

(a) the Court has entered the Preliminary Approval Order,

substantially in the form set forth in Exhibit A attached hereto, as required by ¶ 2

above;

(b) the Settlement Amount has been deposited into the Escrow

Account in accordance with the provisions of ¶ 7 above;

(c) Defendants have not exercised their option to terminate the

Settlement pursuant to the provisions of this Stipulation (including the Supplemental

Agreement described in ¶ 36 below);

(d) Lead Plaintiffs have not exercised their option to terminate the

Settlement pursuant to the provisions of this Stipulation; and

(e) the Court has approved the Settlement as described herein,

following notice to the Class and a hearing, as prescribed by Rule 23 of the Federal

Rules of Civil Procedure, and entered the Judgment and that Judgment has become

Final, or the Court has entered an Alternate Judgment and neither Lead Plaintiffs nor

Defendants seek to terminate the Settlement and that Alternate Judgment has

become Final.

33. Upon the occurrence of all of the events referenced in ¶ 32 above, any

and all remaining interest or right of Defendants or their insurance carriers in or to


41

the Settlement Fund, if any, shall be absolutely and forever extinguished and the

Releases herein shall be effective.

34. If (i) Defendants exercise their right to terminate the Settlement as

provided in this Stipulation; (ii) Lead Plaintiffs exercise their right to terminate the

Settlement as provided in this Stipulation; (iii) the Court disapproves the Settlement;

or (iv) the Effective Date as to the Settlement otherwise fails to occur, then:

(a) The Settlement and the relevant portions of this Stipulation shall

be canceled and terminated.

(b) Lead Plaintiffs and Defendants shall revert to their respective

positions in the Action as of immediately prior to the execution of the Term Sheet

on March 9, 2020.

(c) The terms and provisions of this Stipulation, with the exception

of this ¶ 34 and ¶¶ 13, 16, 38, 58, and 59 shall have no further force and effect with

respect to the Parties and shall not be used in the Action or in any other proceeding

for any purpose, and any Judgment or Alternate Judgment, if applicable, or order

entered by the Court in accordance with the terms of this Stipulation shall be treated

as vacated, nunc pro tunc.

(d) Within five (5) business days after joint written notification of

termination is sent by Defendants’ Counsel and Lead Counsel to the Escrow Agent,


42

the Settlement Fund (including accrued interest thereon, and change in value as a

result of the investment of the Settlement Fund, and any funds received by Lead

Counsel consistent with ¶ 16 above), less any Notice and Administration Costs

actually incurred, paid, or payable and less any Taxes paid, due, or owing shall be

refunded by the Escrow Agent to Aeterna (or such other persons or entities as

Aeterna may direct). In the event that the funds received by Lead Counsel consistent

with ¶ 16 above have not been refunded to the Settlement Fund within the five (5)

business days specified in this paragraph, those funds shall be refunded by the

Escrow Agent to Defendants (or such other persons or entities as Defendants may

direct) immediately upon their deposit into the Escrow Account consistent with ¶ 16

above.

35. It is further stipulated and agreed that Lead Plaintiffs, provided they

unanimously agree, and Defendants, provided they unanimously agree, shall each

have the right to terminate the Settlement and this Stipulation, by providing written

notice of their election to do so (“Termination Notice”) to the other Parties to this

Stipulation within thirty (30) days of: (a) the Court’s final refusal to enter the

Preliminary Approval Order in any material respect; (b) the Court’s final refusal to

approve the Settlement or any material part thereof; (c) the Court’s final refusal to

enter the Judgment in any material respect as to the Settlement; (d) the date upon


43

which the Judgment is modified or reversed in any material respect by the United

States Court of Appeals for the Third Circuit or the United States Supreme Court; or

(e) the date upon which an Alternate Judgment is modified or reversed in any

material respect by the United States Court of Appeals for the Third Circuit or the

United States Supreme Court, and the provisions of ¶ 34 above shall apply.

However, any decision or proceeding, whether in this Court or any appellate court,

with respect to an application for an award of attorneys’ fees or Litigation Expenses

or with respect to any plan of allocation shall not be considered material to the

Settlement, shall not affect the finality of any Judgment or Alternate Judgment, if

applicable, and shall not be grounds for termination of the Settlement.

36. In addition to the grounds set forth in ¶ 35 above, Defendants, provided

they unanimously agree, shall have the right to terminate the Settlement in the event

that Class Members timely and validly requesting exclusion from the Class meet the

conditions set forth in Defendants’ confidential supplemental agreement with Lead

Plaintiffs (the “Supplemental Agreement”), in accordance with the terms of that

agreement. The Supplemental Agreement, which is being executed concurrently

herewith, shall not be filed with the Court and its terms shall not be disclosed in any

other manner (other than the statements herein and in the Notice, to the extent

necessary, or as otherwise provided in the Supplemental Agreement) unless the


44

Court otherwise directs or a dispute arises between Lead Plaintiffs and Defendants

concerning its interpretation or application, in which event the Parties shall submit

the Supplemental Agreement to the Court in camera and/or under seal and request

that the Court afford it confidential treatment.

37. If the Settlement Amount is not paid into the Escrow Account in

accordance with ¶ 7 of this Stipulation, then Lead Plaintiffs, on behalf of the Class,

and not Defendants, shall have the right to terminate the Settlement, but only if

(a) Lead Counsel has first notified Defendants’ Counsel in writing of Lead Plaintiffs’

intent to terminate pursuant to this paragraph, and (b) the entire Settlement Amount

is not deposited in the Escrow Account within five (5) business days after Lead

Counsel has provided such written notice.

NO ADMISSION OF WRONGDOING

38. Neither the Term Sheet, this Stipulation (whether or not consummated),

including the exhibits hereto and the Plan of Allocation contained therein (or any

other plan of allocation that may be approved by the Court), the negotiations leading

to the execution of the Term Sheet and this Stipulation, nor any proceedings taken

pursuant to or in connection with the Term Sheet, this Stipulation, and/or approval

of the Settlement (including any arguments proffered in connection therewith):


45

(a) shall be offered against any of the Defendants’ Releasees as

evidence of, or construed as, or deemed to be evidence of any presumption,

concession, or admission by any of the Defendants’ Releasees with respect to the

truth of any fact alleged by Lead Plaintiffs or any member of the Class or the validity

of any claim that was or could have been asserted or the deficiency of any defense

that has been or could have been asserted in this Action or in any other litigation, or

of any liability, negligence, fault, or other wrongdoing of any kind of any of the

Defendants’ Releasees, or in any way referred to for any other reason as against any

of the Defendants’ Releasees, in any arbitration proceeding or other civil, criminal,

or administrative action or proceeding, other than such proceedings as may be

necessary to effectuate the provisions of this Stipulation;

(b) shall be offered against any of the Plaintiffs’ Releasees as

evidence of, or construed as, or deemed to be evidence of any presumption,

concession, or admission by any of the Plaintiffs’ Releasees that any of their claims

are without merit, that any of the Defendants’ Releasees had meritorious defenses,

or that damages recoverable under the Complaint would not have exceeded the

Settlement Amount, or with respect to any liability, negligence, fault, or wrongdoing

of any kind, or in any way referred to for any other reason as against any of the

Plaintiffs’ Releasees, in any arbitration proceeding or other civil, criminal, or


46

administrative action or proceeding, other than such proceedings as may be

necessary to effectuate the provisions of this Stipulation;

(c) shall be construed against any of the Releasees as an admission,

concession, or presumption that the consideration to be given hereunder represents

the amount which could be or would have been recovered after trial;

provided, however, that if this Stipulation is approved by the Court, the Parties and

the Releasees and their respective counsel may refer to it to effectuate the protections

from liability granted hereunder or otherwise to enforce the terms of the Settlement.

MISCELLANEOUS PROVISIONS

39. All of the exhibits attached hereto and the Supplemental Agreement are

material and integral parts hereof and are hereby incorporated by reference as though

fully set forth herein. Notwithstanding the foregoing, in the event that there exists a

conflict or inconsistency between the terms of this Stipulation and the terms of any

exhibit attached hereto, the terms of the Stipulation shall prevail.

40. Aeterna warrants that, as to the payments made or to be made on behalf

of it, at the time of entering into this Stipulation and at the time of such payment

Aeterna, or to the best of its knowledge the entities contributing to the payment of

the Settlement Amount, were not insolvent, nor will the payment required to be made

by or on behalf of Aeterna render them insolvent, within the meaning of and/or for


47

the purposes of the United States Bankruptcy Code, including §§ 101 and 547

thereof. This representation is made by Aeterna and not by its counsel.

41. In the event of the entry of a final order of a court of competent

jurisdiction determining the transfer of money to the Settlement Fund or any portion

thereof by or on behalf of Defendants to be a preference, voidable transfer,

fraudulent transfer, or similar transaction and any portion thereof is required to be

returned, and such amount is not promptly deposited into the Settlement Fund by

others, then, at the election of Lead Plaintiffs, Lead Plaintiffs and Defendants shall

jointly move the Court to vacate and set aside the Releases given and the Judgment

or Alternate Judgment, if applicable, entered in favor of Defendants and the other

Releasees pursuant to this Stipulation, in which event the Releases and Judgment, or

Alternate Judgment, if applicable, shall be null and void, and the Parties shall be

restored to their respective positions in the litigation as provided in ¶ 34 above and

any cash amounts in the Settlement Fund (less any Taxes paid, due, or owing with

respect to the Settlement Fund and less any Notice and Administration Costs actually

incurred, paid, or payable) shall be returned as provided in ¶ 34 above.

42. The Parties intend this Stipulation and the Settlement to be a final and

complete resolution of all disputes asserted or which could be asserted by Lead

Plaintiffs and any other Class Members against the Defendants’ Releasees with


48

respect to the Released Plaintiffs’ Claims. Accordingly, Lead Plaintiffs and their

counsel and Defendants and their counsel agree not to assert in any forum that this

Action was brought by Lead Plaintiffs or defended by Defendants in bad faith or

without a reasonable basis. The Settlement compromises all claims that were or are

contested and shall not be deemed an admission by any Party as to the merits of any

claim or defense. No Party shall assert any claims of any violation of Rule 11 of the

Federal Rules of Civil Procedure relating to the institution, prosecution, defense, or

settlement of this Action. The Parties agree that the amounts paid and the other

terms of the Settlement were negotiated at arm’s length and in good faith by the

Parties, including through a mediation process supervised and conducted by the

Honorable Daniel Weinstein of JAMS, and reflect the Settlement that was reached

voluntarily after extensive negotiations and consultation with experienced legal

counsel, who were fully competent to assess the strengths and weaknesses of their

respective clients’ claims or defenses.

43. While retaining their right to deny any wrongful conduct or liability or

that the claims asserted in the Action were meritorious, Defendants and their

counsel, in any statement made to any media representative (whether or not for

attribution) will not assert that the Action was commenced or prosecuted in bad faith,

nor will they deny that the Action was commenced and prosecuted in good faith and


49

is being settled voluntarily after consultation with competent legal counsel.

Similarly, while retaining their right to deny that the defenses asserted in the Action

were meritorious, Lead Plaintiffs and their counsel, in any statement made to any

media representative (whether or not for attribution), will not assert that the Action

was defended in bad faith, nor will they deny that the Action was defended in good

faith and is being settled voluntarily after consultation with competent legal counsel.

In all events, Lead Plaintiffs and their counsel and Defendants and their counsel shall

not make any accusations of wrongful or actionable conduct by either Party

concerning the prosecution, defense, and resolution of the Action, and shall not

otherwise suggest that the Settlement constitutes an admission of any claim or

defense alleged. Lead Plaintiffs and Defendants agree that there will be no public

announcements regarding this Settlement until: (a) Aeterna has announced or

disclosed it; or (b) three (3) business days after the filing of this Stipulation with the

Court, whichever comes first.

44. The terms of the Settlement, as reflected in this Stipulation, may not be

modified or amended, nor may any of its provisions be waived except by a writing

signed on behalf of the Parties (or their successors-in-interest).

45. The headings herein are used for the purpose of convenience only and

are not meant to have legal effect.


50

46. The administration and consummation of the Settlement as embodied

in this Stipulation shall be under the authority of the Court, and the Court shall retain

jurisdiction for the purpose of entering orders providing for awards of attorneys’ fees

and Litigation Expenses to Plaintiffs’ Counsel and enforcing the terms of this

Stipulation, including the Plan of Allocation (or such other plan of allocation as may

be approved by the Court) and the distribution of the Net Settlement Fund to Class

Members.

47. The waiver by one Party of any breach of this Stipulation by any other

Party shall not be deemed a waiver of any other prior or subsequent breach of this

Stipulation.

48. This Stipulation and its exhibits and the Supplemental Agreement

constitute the entire agreement among the Parties concerning the Settlement and this

Stipulation and its exhibits. All Parties acknowledge that no other agreements,

representations, warranties, or inducements have been made by any Party hereto

concerning this Stipulation, its exhibits, or the Supplemental Agreement other than

those contained and memorialized in such documents.

49. This Stipulation may be executed in one or more counterparts,

including by signature transmitted via facsimile, or by a .pdf/.tif image of the


51

signature transmitted via email. All executed counterparts and each of them shall be

deemed to be one and the same instrument.

50. This Stipulation shall be binding upon and inure to the benefit of the

successors and assigns of the Parties, including any and all Releasees and any

corporation, partnership, or other entity into or with which any Party hereto may

merge, consolidate, or reorganize.

51. The construction, interpretation, operation, effect, and validity of this

Stipulation, the Supplemental Agreement, and all documents necessary to effectuate

it shall be governed by the internal laws of the State of New Jersey without regard

to conflicts of laws, except to the extent that federal law requires that federal law

govern.

52. Any action arising under or to enforce this Stipulation or any portion

thereof, shall be commenced and maintained only in the Court.

53. This Stipulation shall not be construed more strictly against one Party

than another merely by virtue of the fact that it, or any part of it, may have been

prepared by counsel for one of the Parties, it being recognized that it is the result of

arm’s length negotiations between the Parties and all Parties have contributed

substantially and materially to the preparation of this Stipulation.


52

54. All counsel and any other person executing this Stipulation and any of

the exhibits hereto, or any related Settlement documents, warrant and represent that

they have the full authority to do so and that they have the authority to take

appropriate action required or permitted to be taken pursuant to the Stipulation to

effectuate its terms.

55. Lead Counsel and Defendants’ Counsel agree to cooperate fully with

one another in seeking Court approval of the Preliminary Approval Order and the

Settlement, as embodied in this Stipulation, and to use best efforts to promptly agree

upon and execute all such other documentation as may be reasonably required to

obtain final approval by the Court of the Settlement.

56. If any Party is required to give notice to another Party under this

Stipulation, such notice shall be in writing and shall be deemed to have been duly

given upon receipt of hand delivery or email transmission, with confirmation of

receipt. Notice shall be provided as follows:

If to Lead Plaintiffs or Lead

Counsel:

The Rosen Law Firm

Attn: Laurence Rosen, Esq.

One Gateway Center, Suite 2600

Newark, NJ 07102

Telephone: (973) 313-1887

Email: [email protected]

Glancy Prongay & Murray LLP

Attn: Kara M. Wolke, Esq.

1925 Century Park East, Suite 2100


53

Los Angeles, CA 90067

Telephone: (310) 201-9150


If to Defendant Aeterna:

If to Individual Defendants:

Norton Rose Fulbright US LLP

Attn: Gerard G. Pecht, Esq.

Fulbright Tower

1301 McKinney

Houston, TX 77010

Telephone: (713) 651-5151

Email:

[email protected]

King & Spalding LLP

Attn: Michael R. Smith, Esq.

Brandon R. Keel, Esq.

1180 Peachtree Street N.E.

Atlanta, GA 30309

Telephone: (404) 572-4600


[email protected]

57. Except as otherwise provided herein, each Party shall bear its own

costs.

58. Whether or not the Stipulation is approved by the Court and whether or

not the Stipulation is consummated, or the Effective Date occurs, the Parties and

their counsel shall use their best efforts to keep all negotiations, discussions, acts

performed, agreements, drafts, documents signed, and proceedings in connection

with the Stipulation confidential, except where disclosure may be required by law.


54

59. All agreements made and orders entered during the course of this

Action relating to the confidentiality of information shall survive this Settlement.

60. No opinion or advice concerning the tax consequences of the proposed

Settlement to individual Class Members is being given or will be given by the Parties

or their counsel; nor is any representation or warranty in this regard made by virtue

of this Stipulation. Each Class Member’s tax obligations, and the determination

thereof, are the sole responsibility of the Class Member, and it is understood that the

tax consequences may vary depending on the particular circumstances of each

individual Class Member.

61. Pending final determination of whether the Settlement should be

approved, all proceedings in this Action shall be stayed and all Class Members shall

be barred and enjoined from prosecuting any of the Released Plaintiffs’ Claims

against Defendants or any Defendants’ Releasees.

IN WITNESS WHEREOF, the Parties hereto have caused this Stipulation

to be executed, by their duly authorized attorneys, as of July 22, 2020.

THE ROSEN LAW FIRM

By: __________________________

Laurence Rosen

Yu Shi (pro hac vice)

One Gateway Center, Suite 2600

Newark, NJ 07102


laurencerosenPencil

55

Telephone: (973) 313-1887

Facsimile: (973) 833-0399


[email protected]

Kara M. Wolke (pro hac vice)

Kevin F. Ruf (pro hac vice)

GLANCY PRONGAY & MURRAY

LLP

1925 Century Park East, Suite 2100

Los Angeles, CA 90067

Telephone: (310) 201-9150

Facsimile: (310) 201-9160


[email protected]

Lead Counsel for Lead Plaintiffs

and the Class

Donald A. Ecklund

James E. Cecchi

CARELLA, BYRNE, CECCHI,

OLSTEIN, BRODY & AGNELLO, P.C.

5 Becker Farm Road

Roseland, NJ 07068

Telephone: (973) 994-1700

Facsimile: (973) 994-1744


jcecchi@ carellabyrne.com

Liaison Counsel for Lead Plaintiffs and

the Class

NORTON ROSE FULBRIGHT US LLP

By: __________________________

Gerard G. Pecht (pro hac vice)


Date post:	03-Feb-2021
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UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY · 7/22/2020 · B. By Order dated March 3,...

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